LIFO Conformity Requirement

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Part III. Administrative, Procedural, and Miscellaneous
Returns Relating to Higher
Education Tuition and Related
Expenses
Notice 98–46
PURPOSE
This notice provides that the Internal
Revenue Service and the Treasury Department are extending the application of Notice 97–73, 1997–51 I.R.B. 16, to information reporting required under § 6050S of
the Internal Revenue Code for 1999.
BACKGROUND
Section 6050S, enacted by the Taxpayer Relief Act of 1997, Pub. L. No.
105–34, § 201(c), 111 Stat. 804, requires
the filing of information returns to assist
taxpayers and the Service in determining
the Hope Scholarship credit and the Lifetime Learning credit that taxpayers may
claim pursuant to § 25A of the Code.
Section 6050S requires that institutions
file the specified information returns with
the Service and provide a corresponding
statement to the individuals named on the
information return showing the information that has been reported.
The requirements of § 6050S are generally described in Notice 97–73, along
with specific information reporting requirements for 1998. However, as a result of amendments to § 6050S made by
the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No.
105–206, 112 Stat. 685, certain information reporting requirements under
§ 6050S have been clarified or changed.
First, the amendments clarify that
§ 6050S requires institutions to report the
aggregate amount of payments made with
respect to each student for qualified tuition and related expenses without any
amounts being subtracted for qualified
scholarships or other tax-free educational
assistance received with respect to the
student. Further, § 6050S(b)(2)(C), as
amended, specifically requires that the
amount of any grant received by the student for payment of costs of attendance
and processed by the institution making
the information return be reported as a
separate item. Section 6050S(b)(2)(C)
was also amended to clarify that an insti-

1998–36 I.R.B.

tution must report only the aggregate
amount of reimbursements and refunds of
qualified tuition and related expenses paid
to a student by the institution (and not by
any other party). Finally, § 6050S(a) was
amended to clarify that only eligible educational institutions and persons engaged
in a trade or business of making payments
to individuals under insurance arrangements are required to report information
under § 6050S. In all other respects, the
requirements of § 6050S remain the same
as described in Notice 97–73.
The Treasury Department intends to
issue regulations soon on the information
reporting requirements of § 6050S. In
light of the recent statutory changes and
legislative history prepared in connection
with those changes indicating Congress’s
intent that Notice 97–73 remain in effect
until the regulations are issued, the Service is extending the application of Notice
97-73 for an additional year, i.e., to information reporting required under § 6050S
for 1999.
DISCUSSION
For 1999, eligible educational institutions must follow the rules provided in
Notice 97–73 for reporting information
required under § 6050S. For example, an
eligible educational institution that receives payments of qualified tuition and
related expenses in 1999 must file a Form
1098-T, Tuition Payments, that includes
the same information that was required by
Notice 97–73 for 1998. The Forms 1098–
T must be filed with the Service by February 28, 2000, if filed on paper or by magnetic media, or by March 31, 2000, if
filed electronically. A statement containing the same information as the Form
1098-T filed with the Service must be furnished to the student by January 31, 2000.
Similarly, Notice 97–73 applies for 1999
with respect to how penalties will be administered under §§ 6721 and 6722 for information returns required under § 6050S.
EFFECT ON OTHER DOCUMENTS
Notice 97–73 is modified.
DRAFTING INFORMATION
The principal author of this notice is
John J. McGreevy of the Office of the As-

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sistant Chief Counsel (Income Tax and
Accounting). For further information regarding this notice contact him on (202)
622-4910 (not a toll-free call).
26 CFR 1.472–2: Requirements incident to
adoption and use of LIFO inventory method.
(Also Part I, § 472; § 1.472–1.)

Rev. Proc. 98–46
SECTION 1. PURPOSE
.01 This revenue procedure modifies
Rev. Proc. 97–44, 1997–41 I.R.B. 8,
which provides relief for automobile and
light-duty truck dealers that elected the
last-in, first-out (LIFO) inventory method
and violated the LIFO conformity requirement of § 472(c) or (e)(2) of the Internal Revenue Code by providing, for
credit purposes, an income statement prepared in a format required by the franchisor or on a pre-printed form supplied
by the franchisor (an automobile manufacturer), covering any taxable year ended
on or before October 14, 1997, that fails
to reflect the LIFO inventory method.
.02 Rev. Proc. 97–44 is modified to extend the relief provided in that revenue
procedure to medium- and heavy-duty
truck dealers that comply with Rev. Proc.
97–44 as modified herein. In addition,
Rev. Proc. 97–44 is modified to extend the
due dates for medium- and heavy-duty
truck dealers to make installment payments of the settlement amount computed
in accordance with that revenue procedure.
SECTION 2. MODIFICATIONS
.01 Section 1 of Rev. Proc. 97–44 is
modified by adding the words “and truck”
after the word “automobile” in the first
and third sentences, and by adding the
words “or truck” after the word “automobile” in the parenthetical phrase in the
first sentence.
.02 Section 3 of Rev. Proc. 97–44 is
modified by replacing the words “lightduty” with the words “light-, medium-, or
heavy-duty” in the first sentence and by
adding the words “or truck” after the
word “automobile” in the parenthetical
phrase in the first sentence.
.03 Section 5.02(2) of Rev. Proc. 97–44
is modified by replacing the words “light-

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duty” with the words “light-, medium-,
and heavy-duty” in the second sentence.
.04 Section 5.03(1) of Rev. Proc. 97–44
is modified by replacing the second sentence with the following two sentences:
Except as provided in section
5.03(2) or (3) of this revenue procedure, the first installment and the
memorandum described in section
5.04 of this revenue procedure are
due on or before May 31, 1998, in
the case of inventory related to the
purchase, sale, and service of automobiles or light-duty trucks. Except
as provided in section 5.03(2) or (3)
of this revenue procedure, the first
installment and the memorandum
described in section 5.04 of this revenue procedure are due on or before
January 31, 1999, in the of case inventory related to the purchase, sale,
and service of medium- or heavyduty trucks.
.05 Section 5.03(2) of Rev. Proc. 97–44
is modified by replacing section 5.03(2)
with the following paragraph:
(2) Taxpayers under examination,
before appeals, or before a federal
court. If any federal income tax return of a taxpayer is under examination, before an appeals office, or before a federal court on October 14,
1997, the first installment of the settlement amount and the memorandum described in section 5.04 of this
revenue procedure with respect to inventory related to the purchase, sale,
and service of automobiles and lightduty trucks are due on or before December 1, 1997. Such a taxpayer
must notify the examining agent(s),

September 8, 1998

appeals officer, or the counsel for the
government, whichever is applicable, in writing on or before December 15, 1997, that it has applied for
relief under this revenue procedure.
If any federal income tax return of a
taxpayer is under examination, before an appeals office, or before a
federal court on September 8, 1998,
the first installment of the settlement
amount and the memorandum described in section 5.04 of this revenue procedure with respect to inventory related to the purchase, sale,
and service of medium- and heavyduty trucks are due on or before December 1, 1998. Such a taxpayer
must notify the examining agent(s),
appeals officer, or the counsel for the
government, whichever is applicable, in writing on or before December 15, 1998, that it has applied for
relief under this revenue procedure.
For these purposes, the terms “under
examination,” “before an appeals office,” and “before a federal court”
have the same meaning as provided
in Rev. Proc. 97–27, 1997–21
I.R.B. 10. Evidence that the first installment has been paid and a copy
of the memorandum described in
section 5.04 of this revenue procedure must be provided as part of this
written notification.
.06 Section 5.03(3) of Rev. Proc. 97–44
is modified by replacing section 5.03(3)
with the following paragraph:
(3) Option to pay settlement
amount in one installment. A taxpayer may elect to pay the entire settlement amount in one installment.

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If a taxpayer makes this election, the
entire settlement amount and the
original memorandum described in
section 5.04 of this revenue procedure with respect to inventory related to the purchase, sale, and service of automobiles and light-duty
trucks are due on or before May 31,
1998, or, if any federal income tax
return of such taxpayer is under examination, before an appeals office,
or before a federal court, on or before December 1, 1997. The entire
settlement amount and the original
memorandum described in section
5.04 of this revenue procedure with
respect to inventory related to the
purchase, sale, and service of
medium- and heavy-duty trucks are
due on or before January 31, 1999,
or, if any federal income tax return
of such taxpayer is under examination, before an appeals office, or before a federal court, on or before December 1, 1998.
.07 Section 7.02 of Rev. Proc. 97–44 is
modified by deleting the words “lightduty” in the first sentence.
.08 Section 9 of Rev. Proc. 97–44 is
modified by adding the words “or trucks”
after the word “automobiles” in the third
sentence of the third paragraph.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Jeffery G. Mitchell of the Office of Assistant Chief Counsel (Income
Tax & Accounting). For further information regarding this revenue procedure,
contact Mr. Mitchell on (202) 622-4970
(not a toll-free call).

1998–36 I.R.B.